Predict your tax obligations and pay them along the way to ensure you do not owe at the end of the year.

Obviously, if you are not investing for retirement now, retirement will never come later. Save. Savings covers the "messy" events that blow up monthly budgets. In my opinion, everything else is much less important, and that is a great place to trim costs. So with the remaining money, prioritize and spend.

A budget should reflect what you value the most. So during the hustle and bustle of Black Friday be sure to prioritize spending on what really matters most to you first, and use Black Friday as an opportunity to trim costs on the plastic products that don't really make us happier.

Monday, November 18, 2013

Multiple reports have been published explaining that when high school students list their preferred colleges on federal financial aid applications, that they could be used against them.

"A university concerned about its "yield" - a closely-watched measure that tracks how many accepted students actually enroll - may not extend an admission offer if the university is near the bottom of an otherwise qualified student's list, for fear the offer will be rejected.

A college at the top of a student's list, on the other hand, may not feel compelled to offer generous financial aid, since the student is seen as likely to accept without it."

The advice our guidance counselors are giving is to have our students list their top ten in alphabetical order.

Friday, November 15, 2013

A new trend in personal finance classrooms is to create micro-economies. I am a big fan of using a micro-economy when they are managed appropriately, particularly in the elementary grades. A matter of fact, I advised Vanguard on their development of MyClassroomEconomy and serve on the advisory council for BizWorld. To put my concern about micro-economies into context, I need to address the spirit and environment of a personal finance classroom.One view: Personal Finance should be offered in every school so our children will be empowered with tools and concepts to be rich.

My view: Personal Finance should be offered in every school so our children will be empowered with practical tools and concepts to live a happy life.

Perspective on happiness varies from person to person. For some, happiness does indeed correlate with great wealth. For most, research has found that financial stability is most correlated with happiness, not great wealth.

To begin the year in my classroom we play the Awesome Island Game (which I no longer own the rights). In my game, participants simulate a life over the span of forty years. The financial choices they make impact their net worth. Most students aspire to conclude the game with the greatest net worth, earning them a ticket to "Awesome Island".

Earlier this semester I noticed one of our brightest students was accumulating enough assets to earn a ticket to Awesome Island. However, at the conclusion of the game he only had enough money to purchase a ticket to "It's Okay Island". I quickly reviewed his budget and recognized on the philanthropy line item that he had given most of his wealth away at the end of his life. It was important for him to give back, it is what makes him happy. I was impressed that he understood that feeling awesome has more to do with what lies in your heart, rather than the zip code under your feet.

With that said, I am a big fan of using micro-economies when they are managed appropriately. However, here are my concerns...

Correlating test grades with a micro-economy can be contrary to the spirit of a personal finance class. We want students to understand how to generate wealth and value the benefits of capitalism. However, if a teacher is strictly correlating the success of a student with wealth, what does that say about us? Let's not send a message to our students that serving as a teacher, fire fighter, police officer, social worker, soldier, etc. makes us a failure because we don't have the same bottom line as an investment banker.

Including test grades as a part of a micro-economy can be counterproductive to some special education children who cognitively do not have the ability to test as well as some of their peers. Many of these kids go through school frustrated and fully aware of their challenges. Our classrooms should give them hope, not a rank.

Including test grades as a part of a micro-economy is not necessarily an accurate reflection of how well a student will do financially in life. As an example, my students have participated in the bill paying simulation Budget Challenge for a number of years. I do not give them time in class to work, it is purely for homework and designed to measure whether they are gritty enough to stay on top of their bills throughout the semester in their own time. In other words, I'm assessing their behavior. I have found...

there is a correlation between content and behavior, however...

some students who test well are not gritty enough to pay their bills on time.

some students who do not test well are gritty enough to pay their bills on time, but struggle to make good choices. However, many of these students still outperform the good test takers who are apathetic.

Like I said, a micro-economy can be a great experience for students. I am drawn to experiential learning, particularly when it incorporates entrepreneurship opportunities. How to generate great wealth is a lesson every child should learn. Kids also need to experience the value of making enough money and managing it well enough to reach their own goals. Just be careful how you implement the simulation.

About Me

My wife and I are raising our three children and dog in Kenwood, Ohio. I am a teacher and outreach director deeply passionate about financial education in our schools. I enjoy sharing financial literacy resources fellow educators can incorporate into their classrooms. I have become particularly interested in behavioral finance.